Correlation Between Magna International and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Magna International and KeyCorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Magna International and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and KeyCorp, you can compare the effects of market volatilities on Magna International and KeyCorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Magna International with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and KeyCorp.
Diversification Opportunities for Magna International and KeyCorp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Magna and KeyCorp is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Magna International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Magna International are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Magna International i.e., Magna International and KeyCorp go up and down completely randomly.
Pair Corralation between Magna International and KeyCorp
Considering the 90-day investment horizon Magna International is expected to under-perform the KeyCorp. In addition to that, Magna International is 1.0 times more volatile than KeyCorp. It trades about 0.0 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.02 per unit of volatility. If you would invest 2,164 in KeyCorp on August 28, 2024 and sell it today you would earn a total of 340.00 from holding KeyCorp or generate 15.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. KeyCorp
Performance |
| Timeline |
| Magna International |
| KeyCorp |
Magna International and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and KeyCorp
The main advantage of trading using opposite Magna International and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International position performs unexpectedly, KeyCorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KeyCorp will offset losses from the drop in KeyCorp's long position.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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